Private equity and investment management fuel strong year of rebound for Schulte

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Schulte Roth & Zabel came back well from a down year in 2020 to post 6% revenue growth, a 7.8% increase in revenue per lawyer and a 12.6% increase in profit per partner, the strategic focus on firm core competencies having paid off.

This 6% increase in revenue saw the company grow to $471 million in overall revenue and its RPL reached $1.38 million. The 12.6% increase in PPP saw the company cross the $3.5 million threshold and land at $3.65 million.

The firm, often grouped with much larger New York firms, has a more focused strategy to go to market, and a focus on private equity and investment managers has been key to the company’s success. business last year, according to co-managers David Efron and Marc Elovitz.

“We are an elite, high-level financial services firm with a focus on private capital,” Efron said. “We represent over 400 investment managers and their representatives across the spectrum. And there has been a fundamental shift forward on private capital.

Efron went on to say that the company, while much smaller than most other “mainstream” New York businesses, prides itself on prioritizing quality over quantity.

“More than half of our partnership is Chambers rated,” he said. “Our investment funds practice is ranked number one across the board. In short, the strategy that we have been implementing since Marc and I took over in 2020 is to make financial services work with top talent.

This top talent encountered an opportunity in 2021, resulting in a 6% increase in net income to $233 million.

“Investment management and private equity has exploded as an industry,” Elovitz said. “We were up over 22% in this group last year after building it for decades. What’s happening there is not business as usual, but a real sea change in terms of cross funds and funds that do all kinds of investments This change has created all kinds of opportunities for us because we have the expertise to work closely with our clients to develop new approaches to mobilize and deploy This drives the growth of investment management.

David Efron. David Efron.

Efron and Elovitz said the firm’s work with Engine 1, the small investment firm that led an activist investor proxy contest against Exxon Mobil in 2021 and won, was a good example of how the business likes to operate.

Owning just 0.02% of the company, ESG-minded Engine 1 worked with co-head of Schulte’s global shareholder activism group, Ele Klein, to secure three seats on Exxon’s board. Mobil Corp. after a rather controversial and highly publicized debate. , campaign.

Klein was appointed Negotiator of the year by The American lawyer for his work on the subject.

“It was really telling that this is our sweet spot,” Elovitz said. “The most sophisticated work that goes off the beaten track. We do top-tier business and aren’t afraid to be different or face big competition.

The company also highlighted its work with Brinley Partners, an investment fund entirely owned by women. Schulte advised Kerry Dolan, formerly Managing Director, Principal Debt and Credit Investments at PSP Investments, on the formation of Brinley Partners LP with start-up support from an affiliate of a major Canadian investment manager.

In addition to backing the creation of Brinley Partners, the seed investor has committed $1.5 billion to Brinley Partners’ first fund and an additional $1.5 billion to a co-investment program, with power to engage leverage, providing Brinley Partners with up to $5 billion of investment capacity, if such leverage is engaged, to invest in senior debt.

“This case was remarkable not only because of its size, but also because of its diversity,” Efron said. “That’s what we like.”

The firm’s workforce is down slightly (-1.7%) to 342 lawyers, with the joint venture going from 68 to 64 partners, a drop of -5.9%.

Mark Elovitz. Mark Elovitz.

While Schulte was slightly smaller, Elovitz said the company doesn’t have some of the same associate attrition issues that many other companies have, and credits the company’s approach and culture for mitigating this. .

“I think it’s because we’re a very people-oriented company,” he said. “We do not view or treat our associates as cogs in a machine where they are only worth the hours they put in. We are not a machine and we are not going to be.

The firm was also active on the pro bono front, including representing the only three known survivors of the 1921 Tulsa Race Massacre in Randle c. City of Tulsa.

The lawsuit argues that the city of Tulsa and others “have created a public nuisance of racial disparity, economic inequality, insecurity, and trauma,” and calls on the city to establish a compensation fund for its victims and their descendants.

“This case is about our company values,” Elovitz said.

As for 2022, the company said it’s been “really busy” and early first-quarter feedback suggests 2022 will be a better year for Schulte than 2021.

“Again, it’s driven by private capital and our customer base,” Efron said. “Rises in asset management mergers and acquisitions, extensive fund formation and regulatory work, and enforcement by the SEC and DOJ have definitely resumed.”

Elovitz added, “We’ve built ourselves to capitalize on those opportunities and engage deeply,” he said.

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